Focus on Fees. A Fiduciary at Work.
By Ann Blakey, CFP® at Washington Wealth Advisors
During our conversations with prospective clients, we like to clearly address the topic of fees. As a fiduciary, Washington Wealth Advisors is obligated to act solely in the best interests of our clients. Carefully evaluating and explaining fees is a critical element of what constitutes “acting in the best interests” of our clients.
For our Wealth Advisory Services, like any Fee-Only firm, we are paid directly by our clients. Our service fee is calculated on the assets under management, commonly referred to as “AUM.”
Beyond the AUM – Managing Transaction Fees and Expenses
Partnering with Washington Wealth Advisors as a trusted financial partner can improve the return on your AUM – through careful asset selection, and also from minimizing the underlying fees associated with the investment assets chosen for your portfolio.
Investors understand that there are no guaranteed returns on their investments – stock and bond markets are inherently risky, and returns vary. Therefore, no financial advisor can guarantee your investments will always increase in value.
However, what many investors may not realize is that investments vary greatly in their underlying fees and expenses - and this portion of an investor's cost CAN be determined by your financial advisor. Here are ways fees can be assessed and how we, at Washington Wealth Advisors, can help you to minimize your fees in these areas.
Underlying fees for investments come in many forms. Washington Wealth Advisors is a fiduciary Fee-Only advisor. That means we receive no commissions from buying and selling any investment. Not only does this avoid conflicts of interest that can be inherent when working with a commission-based advisor, but paying no commissions also reduces your cost.
The Expense Ratio
As a fiduciary, Washington Wealth Advisors is obligated to choose investments that are best for YOU based on your unique goals. Part of that choice involves considering the fees associated with each investment product, or Expense Ratio. This is the measurement of how much of a fund's assets are used for administrative and other operating expenses.
To be clear, these are NOT fees charged by Washington Wealth Advisors. These are fees charged by the originator of the investment – a mutual fund manager, for example – and may vary by product.
Our advisors always consider expense ratios as part of the equation when choosing investments. As a fiduciary, we explore the best performance investment options for your portfolio having the lowest cost.
Let’s Look at an Expense Ratio Example
If part of your investment strategy includes owning a broad-based bond investment, Washington Wealth Advisors might choose AGG, which may have an expense ratio of 0.04%, versus other available bond funds that could have expense ratios of 0.7% or higher. All other factors being equal, a lower-cost investment will be in your best interest.
Institutional Share Classes = Lower Fees for Clients
You have another advantage as compared to those not working with a fiduciary advisor like Washington Wealth Advisors. We have access to 'institutional' share classes which are not available to the individual investor. Fees for institutional class shares are always lower and therefore are beneficial to you. Let’s review a couple of examples.
Institutional Share Class Fee Examples
- THIIX bond fund (Institutional class) may be 0.5%, whereas the individual investor class THICX is generally higher, closer to 0.99%.
- FNPFX equity fund (Institutional class) may be 0.41%, whereas the individual investor class NPFCX is generally higher, closer to 1.4%.
Of course, expense ratios are only one of the criteria considered when choosing an asset in the creation of your portfolio. As a fiduciary, Washington Wealth Advisors will choose the lowest-cost investment possible without sacrificing quality.
We are a Fee-Only Fiduciary
At Washington Wealth Advisors, we’re a team of dedicated CFP®s committed to helping you reach your financial goals. We work together to help you create an overall financial planning strategy aligned with your unique goals – getting to your retirement, saving for your kids’ education, securing your retirement – to name a few components. We are here to assist you every step of the way.
IMPORTANT WASHINGTON WEALTH ADVISORS DISCLOSURE INFORMATION.
About Washington Wealth Advisors
Washington Wealth Advisors is a Fee-Only registered investment advisory firm serving busy families, executives, women building wealth and small business owners. We provide Wealth Advisory Services – financial planning coupled with asset management – guided by a personalized investment strategy based on each client’s unique goals. Our fiduciary approach, independent advice and proactive investment management help to support our client’s overall financial peace of mind.